The new climate for procurement in the age of purposeful business

As part of a campaign looking at the trends impacting procurement in 2020, Procurement Leaders has invited a number of thought leaders to provide their insights throughout a range of different areas.

In this guest post, David McClintock, marketing director at EcoVadis, looks at the progress businesses have made in adapting to a more sustainable, purposeful approach to supply chains and asks where procurement teams might focus their efforts to bring about the next change.

Within the last 12 months, there have been numerous ‘corporate movements’ in which CEOs and board members have committed to step up and incorporate social purpose into their business models.

This trend accelerated in March 2019 in March when a growing number of signatories committed to the 10 principles of the United Nations Global Compact (UNGC) around sustainable and responsible business. According to a report on the UNGC principles, companies that have committed to the UNGC demonstrate better sustainability performance than those that have not. Larry Fink, CEO of Blackrock, has written multiple open letters to all existing and potential companies in which he could invest, saying they must take into account their organisation’s social impacts. Most recently, 180 CEOs from the Business Roundtable made a public statement regarding corporate commitments to sustainability, followed by a similar one from the Forbes Sustainable 100. As interest peaks for businesses to commit to a greater purpose for society, we are seeing a deep surge in corporate soul-searching.

Sustainable procurement is a key pillar for purposeful business and aligning related programmes to strategies beyond compliance, metrics, improvement and innovation brings an enduring advantage to those that succeed at it. The index provides business leaders with current regional and industry standings regarding their commitments to sustainable procurement, and helps organisations find places to grow and improve their business models moving forward.

Where do industries stand as of now?

The index offers a comprehensive snapshot across nine industry divisions, as well as performance comparisons by company size and region. Results are based on 40,000 scorecards that cover the themes of environment, labour and human rights, ethics and sustainable procurement across 21 sustainability criteria. It was found in this year’s index that:

Companies are now placing a greater emphasis on labour and human rights issues, possibly at the expense of environmental performance.

Small and medium-sized companies generally receive higher scores than large ones.

European companies outperform other regions, such as North America, Latin America and the Caribbean, and Greater China. Explore even more graphs comparing industry, region and size using this online tool.

Some 68% of companies in global supply chains have no measures in place to address discrimination, harassment and diversity.

The roadmap to sustainability starts with the supply base. Procurement teams should be constantly engaging their suppliers and working with them to assess progress, create frameworks and implement policies that encourage sustainable commitments.

The use-cases for the sustainability ratings on which the index is based are broadening – not only among supply chain trading partners, but also banking, commercial lending and supply chain finance, as well as numerous awards. The results of this year’s index show there is an opportunity to improve sustainability throughout the supply chain. The responsibility falls on procurement leaders to lead the charge toward overall improvement.

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with publishing this content.